Demand Continues to Surge for Victoria Real Estate Market

In typical years, the winter months usually see the real estate industry slow right down, and then speed into overdrive at the first signs of spring. However, this past year and a half has been far from typical, and the real estate markets have reflected that.

Victoria, British Columbia is the capital of Canada’s most western province, and sits on Vancouver Island, making it a luxurious spot to both visit and live. Over the last year, the British Columbia real estate market has been setting records, and the city of Victoria has done much of the same. Mostly driven by an imbalance between supply and demand, prices are rising, and supply is dwindling. The market has been under stress from a supply standpoint which has yet to be corrected.

Victoria Real Estate Board President, David Langlois, supports this by stating, “we’ve seen an imbalance in our market for quite a few months. Our market is based on supply and demand and there is a disconnect right now with record low supply and high demand. Unfortunately, our housing supply is not as elastic as market demand is. Desire for homes in a certain market can erupt quickly, while building homes takes years. These realities make it hard to bring our market into balance. Efforts by the government to dampen demand by making home ownership more expensive through taxes and borrowing limitations do not bring balance. Municipal governments adding costs and time delays to new developments do not bring balance. A commitment to developing our communities over the long term may.”

Victoria Housing Market Continues to Strengthen

Coming off an abnormally warm winter in terms of market performance, numbers were surely to pick up in tandem with the warming outdoor temperatures. Almost setting a record for sales, the month of May recorded 1,049 residential sales in the region as per the Victoria Real Estate Board. While this is a 129.5% gain over unit sales in May 2020, it is slightly lower than the previous month of April 2021 by 6%. David Langlois notes that in order to respond to the increase in demand, the city needs to start creating more homes: “Victoria is an amazing place to live and we will continue to see demand for property here. In the future we need to support the creation of a housing market that can respond to demand and population growth and evolve with community needs. Adding inventory to the Greater Victoria market should be the focus of every municipal council across the region.”

Come month-end, the Victoria Real Estate Board MLS reported 1,450 active listings for sale; an astonishing 43% fewer properties when compared to May 2020, and a 4% decrease month-over-month. These numbers only further support the imbalance noted above in terms of supply and demand. It is no secret that if the Victoria real estate market is to level out anytime soon, there will need to be an influx of new listings month after month to sustain the fierce demand for housing.

As expected, the imbalance of demand versus supply has led to an increase in residential home prices across the city. The Multiple Listing Service Home Price Index benchmark value of a single-family home in May 2021 was $1,036,100 – a 17% increase compared to 12 months prior when the benchmark value was $855,900. In addition to a large year-over-year increase, the benchmark price for May 2021 is also a 3.9% increase compared to April 2021.

What to Expect in the Victoria Real Estate Market This Summer

As the summer begins, it is quite clear that Victoria is in a scorching sellers’ market. Given that demand is only going to grow as border restrictions loosen, perhaps one of the only ways to correct this imbalance in through a generous infusion of supply. Langlois notes that while the municipality has moved towards developing more housing in Victoria, there needs to be a more leveled approach to it: “recently the City of Victoria moved to fast-track non-profit developments, which is an exciting step in the right direction. But continued attention needs to be paid on housing of all types.” With demand far exceeding supply, if you are thinking of selling your home in Victoria, the time is now. Buyers, on the other hand, will need to approach with caution: at the moment, this market is almost too hot to touch!